Spanish Outbound

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Summer bookings from Spain show cause for concern.

Lately, all the tour operators and major players in the outbound industry that I have spoken to have been showing increasing concern that the “peak sales period” isn’t materializing this year. So I asked ForwardKeys if they could give me just a very brief snapshot of the sector, based on booking to 15th May 2012 to see if there is cause for concern.  The snapshot portrait of the market they delivered the next day may not be horrifying but not it’s very flattering either. The data shows that the recession is starting to bite the outbound tourism market in Spain.  

Remember that the analysis by Forward Keys is based on arrivals and bookings over the last months for those nationals spending more than one day in destination (so they do not take into account travellers returning to their own country of origin, those in transit through Spanish airports or those returning the same day). The idea behind incorporating these parameters is that we are isolate and monitor only “real outbound” as opposed to all flights departing from Spanish airports. Our analysis therefore is less prone to manipulation or misinterpretation and should paint a truer picture of how the market is really behaving.

Also note that Forward Keys analyses all the bookings of flights made through GDS systems (including online and offline travel agencies) however they do not have all the data from direct bookings made with the airlines. So that rules out quite a lot of the intra-European travel where increasingly consumers are booking direct on airline websites. It obviously excludes also holidays taken by car (mainly to Andorra, France and Portugal). This does not stop Forward keys giving excellent and extremely useful indicators of trends, tendencies and percentages if not of exact visitor numbers.

In brief, the main findings from the latest analysis of the Spanish Outbound market would be as follows:

1. Year on year departures grew steadily from May 2011 (only the “Easter Week effect” to be noticed in March-April which reflect the different months Easter fell in this year and last).
2. Summer period is, as always, the peak season for departures
3. Bookings are lower in 2012 so departures can be expected to decrease in the next months.
4. January-February were specially active for bookings this year
5. Summer period can expect lower number of departures from Spain according to bookings up to 15^th may.

So it would seem that the comments and concerns I have been hearing from my recent chats with tour operators and travel agents are far from unfounded and now supported by the real booking data.

The reservations for the vitally important peak season in June to September are still not forthcoming. The tour operator campaigns to encourage and incentivise early booking have not quite solved the problem. These campaigns however have definitely helped as can been seen by the increase in bookings (for travel at any time in the year), made in January and February coinciding with the tour operators’ advertising offensive.

Looking on the bright side, as I tend to do, reservations are down as we would expect although not as dramatically as might have been expected and not for all destinations.

The optimist would conclude that people are booking later…the pessimist would say that people are not booking…the realist would say simply “bookings are down to date” and it’s up to us to react to this reality.

So how are agencies and destinations reacting?

This year there has been a sudden profusion of “outlets” for online travel agencies cropping up like mushrooms on a decaying log. Expedia, Viajar, Rumbo, etc. Have all launched similar sites with last minute offers which are emailed to registered clients. Last minute bargain deals are  obviously quite contradictory to the previous strategy of rewarding early booking so agencies are trying to present their last minute offers as fidelity programmes for their regular customers so as not to look too desperate for last minute sales of excess inventory.  Anyway these outlets together with other special offer emails such as Travelzoo and group buying plans such as Grupalia are all trying to entice the reluctant Spanish tourist with last minute offers they can’t refuse (but so far are managing to ignore). I plan to do a specific post looking into this trend and its short and long-term effect on the market but they are definitely a product of the times and a strategic reaction to the current market conditions.

As far as destinations are concerned I would like to think is a case of “fortune favours the brave”. Some destinations are taking the opportunity of low media costs and less competition from other destinations to seize a larger share of the albeit shrinking market. My own logic in these situations is focussed on the size of my slice and not the size of the pie. Despite the fact that less Spanish people are traveling there is no reason to suppose that I cannot increase the numbers traveling to my destination(s). Furthermore if I increase my share of the market now while my competitors are not looking or not caring then when the market starts to grow again my share of that growth will be higher. This week I keep seeing ads for Northern Norway, a destination that one would not normally think as a major player in the Spanish market. I don’t know how much they have invested on their current campaign on buses but it is the first time I can remember really noticing a campaign for Northern Norway and I suspect I am not the only one to notice. I am prepared to bet that the bold Northern Norwegians will be rewarded with a relatively high ROI for their campaign.